The Real Deal New York

Galleries find space crunch in Chelsea

Chelsea, it seems, comes with an expanding border, at least in the art world.

Publisher M. Brendon MacInnis noticed an interesting trend about West Chelsea in the past year while compiling his monthly guide to art galleries. “M, The New York Art World,” lists about 150 galleries in the traditional heart of West Chelsea, between 20th and 25th streets and 10th and 11th avenues.

But MacInnis says he’s now fielding requests for inclusion in the Chelsea-centric guide from gallery owners as far east as Fifth Avenue and as far north as 38th Street.

“The definition of Chelsea is really getting stretched,” says MacInnis, a former gallery owner. “I don’t think you’re going to see cutting-edge galleries open up in real Chelsea, but you’re going to see them try to get that Chelsea status. The Fashion District or Flatiron, or around Koreatown — cutting-edge galleries can afford this.”

A case in point: NYCoo. Located at 20 West 22nd Street, the gallery boasts on its Web site of having moved to a Chelsea location this year. Sure, NYCoo may fit into the broad borders of a greatly expanded Chelsea, but any New Yorker can tell you the gallery’s real neighborhood is named for an iconic building just down the block from NYCoo, the Flatiron. NYCoo did not return a call for comment.

Gallery owners have good reason to expand Chelsea’s confines. Asking rents are rising, reaching up to $75 a square foot for ground floor space, thanks to the recent boom in residential development.

Zoning changes approved last year have cleared the way for developers to bring 5,500 units into West Chelsea, mostly luxury housing. Projects range from developer Alf Naman’s new tower on 23rd Street between 9th and 10th avenues to the creation of a public park on the High Line, an elevated freight rail track that serviced the warehouses that are now pricey loft buildings.

Meanwhile, major players such as Mitchell Innes-Nash are moving to Chelsea from Uptown, or even opening up second spaces, adding to the gallery gridlock. Two major brokers in the area, Roxanne Betesh, of Sinvin Realty Corp., and Susan B. Anthony, of Susan B. Anthony Inc., are each trying to find space for about nine gallery clients. Some of the tenants have spent nearly a year seeking appropriate space they can afford. These tenants want to be on the ground floor, which gallery owners view as critical for visibility and cachet. Betesh doesn’t see gallerists giving up on the search for ground floor space, but there will be a continued winnowing.

“You will not see anybody who is not in the top echelons on the ground floor,” she says. “They can’t afford it and they’re not in the network to know about these things.”

When ground floor space does free up, being in the network is critical. Stuart Siegel, managing director at Grubb & Ellis, just did a deal for Yvon Lambert Gallery at 550 West 21st Street, former home of trendy restaurant Lot 61. About three years ago, he did a deal for Yvon Lambert at 211 West 11th Street for a roughly 4,500-square-foot space at about $40 per square foot. For the new 5,000-square-foot location, asking rent was $65 a foot.

Siegel says that the owner called him as soon as the space became available. He went to see it that afternoon, and worked out a deal in a matter of days. “There really are no ground floors available, and if it becomes available, it’s available for 10 minutes,” he says.

The pressured market is causing some gallerists to develop creative alternatives to the ground floor. Susan B. Anthony recently helped the Sara Meltzer Gallery relocate to a penthouse at 525 West 26th Street. Meltzer had been on the ground floor on West 20th Street but was in a sublease and had to move. A penthouse carries its own kind of cachet, and the space works for Meltzer’s needs.

Rapid upscale development also means that most gallery owners can no longer afford to buy a building, as some did when pioneering the area.

“Everything is a [residential] development site, and there is not a gallery that can compete with a developer,” says Siegel, who is handling sales for the under-construction 20-story commercial condo Chelsea Arts Tower on West 25th Street, where galleries can buy space. Siegel says that five years ago a gallery owner looking to buy space might have been able to spend $1.2 million for a 5,000-square-foot site. Now the site and air rights would carry a $6.5 million or $7 million price tag.

Slated for completion in August, Chelsea Arts Tower has already had several buyers. Marlborough Gallery recently inked a $9.15 million deal for the first and second floors, joining several big-name players. A contemporary Asian gallery just closed on a deal on the seventh floor, and Siegel is in negotiations for five of the six remaining spaces.

While too costly for many gallery owners, Chelsea Arts Tower’s success so far means the project may become a model. Betesh of Sinvin Realty says she is working closely with a couple of other developers who are looking to create similar projects.